Monday, June 12, 2006

Hot Air

Paul Wells is all over Ignatieff's musings on the carbon tax today. Truth be told, I completely missed Ignatieff sending up this flare during the debate so if anyone has a transcript of the exact quote, I wouldn't mind looking it over.

On the issue itself, I kind of like the idea of a carbon tax. Most of the Scandinavian countries have them and pollution taxes are one of the best deterrents to cut back on pollution. That said, I tend to think a tax like this would be extremely unpopular, especially in Alberta. Just a hunch. On the same vein, I wouldn't mind seeing an 18 cent tax of gasoline but, as John Crosbie has shown us, that might not make for a very popular policy.

It will be very interesting to see how this story develops over the next few days, now that the Tories have latched onto it as an issue...

UPDATE: The Herald dives into the issue this morning, with quotes from three of the leadership contenders.

Brison:

A carbon tax would disproportionately hurt the Alberta and Saskatchewan economies, Brison said. But a more broadly based tax, perhaps applied to hydro and other forms of energy as well, wouldn't increase the overall tax burden on Canadians, he said.

Brison said investment tax credits could foster research into clean energy and its development and commercialization. Tax breaks could also be given for environmentally friendly purchases, such as hybrid vehicles.

Ignatieff:

Ignatieff told the Herald he'd never propose levies that increase the overall tax burden on any industry or pit one region of Canada against another. Rather, the system might be shifted toward "taxing polluting behaviour and rewarding environmental behaviour," he said.

"Energy policy and environment policy are national unity issues," said the Toronto MP and former Harvard University professor. "You can't be discriminatory against a province. You can't be discriminatory against an industry."

In Ottawa, Prime Minister Stephen Harper seized on Ignatieff's weekend comments, suggesting during question period the leadership hopeful was referring to some form of "new National Energy Program."

Kennedy:

Kennedy told the Herald editorial board he wants to see a blended environmental and energy policy, but warned it could cause "some pain" for individual consumers.

The government should reaffirm its targets under Kyoto or any future climate change treaties, said the former Ontario cabinet minister.

"The government's role is to put its foot down," Kennedy said. "The government's role is not to roll over and create confusion the way the Harper government has."

However, Kennedy said he'd rather promote new environmental strategies and technologies than impose a "crude" carbon tax."I would worry that anyone would see a carbon tax as just another National Energy (Program)kind of approach."

38 Comments:

Poor Iggy, this is not only a crazy idea, it will sell like a lead weight at a pool party.

Carbon tax is going to mean job layoffs. Gasoline tax is going to mean low-income parents aren't going to be able to afford to send their kids to soccer practice, cause they can't afford the hundred dollars in gas it will cost to drive them around.

As I point out on my blog, I don't think a carbon tax should be removed from the list of policy options. But it's easy to see why Chretien and Martin wouldn't touch it with a barge poll: if you google Alberta and "carbon tax," the first five sites that come up are about Alberta separatism.

Well, frankly, I give Iggy credit for bringing it up. I'd be more interested in seeing how the idea polls outside of Alberta. I would also love to see the Alberta seperatists raise their head at the same time Harper is trying to make a breakthrough in Ontario/Quebec.

Anyone remember the Blue Eyed Sheiks? Time was, Canadians hated Albertans more than they did Torontonians.

I'm tremendously heartened to hear a leadership candidate putting forth unpopular ideas rather than trying to please everyone. Agree or disagree with him - Mr. Ignatieff knew beforehand that a carbon tax would not be a crowdpleaser.. If he sticks by an unpopular opinion, I shall be impressed with his integrity.

For once, and I can't believe I'm saying this, I agree with Iggy. We have to get serious about the environment, even if it means being unpopular.

That said, Ignatieff I believe is already very unpopular with most Liberals and progressive Canadians because he advocates unpopular REGRESSIVE ideas. This seems to be his most unpopular progressive idea, but nevertheless, he just can't say anything to impress people, only turn them off.

How the party judges a candidate who runs on a good but unpopular policy is the real litmus test for a party seeking renewal. If the Liberal party is serious about reducing so-called greenhouse gases, it's time to take a stand and risk being ostricized, which the party was loathe to do in it's recent history.

The media needs to do their job and actually analyze this because I know almost nothing about it. Is it actually anything like the NEP? Would only Albertans be po'ed? Has it actually worked in the Scandinavian countries that they've tried it out in?

I'm dubious about the value of a carbon tax. We're a lot more reliant on coal to generate electricity, gas to heat our homes, and oil to move consumer goods / travel within the country than any country which has successfully implemented a carbon tax.

I'm not saying it can't work, merely that a straight-across comparison isn't apt.

Alberta would be hurt, but so would anywhere dependent on highway transport of manufactured goods, i.e. Ontario.

If people in Ontario are willing to pay carbon taxes on electricity generated from coal, does that mean the Liberal party governing Ontario will be bringing in a carbon tax? Or is making home-owners and businesses pay more for electricity something Dalton won't touch? If it's a good idea, why isn't it already in place?

Both Dion and a have planks in their Environmental platforms about carbon credits which various industries can trade.

Dion says: "There will not be a carbon tax but there are many other environmental taxes that other countries are using that we are not using in Canada."

Brison speaking about private sector innovation says: "Incentives ... can take the form of tax incentive measures – particularly fast write-offs for certain kinds of investment.... A domestic or continental "cap and trade" system for carbon emissions could help set a total annual tonnage, decreasing over time, and industrial users would exchange emission credits among themselves.

A carbon tax if done properly would be revenue neutral and would encourage conservation of fossil fuels. As well, considering the present demand for Alberta energy it would barely cause a blip in their growth.

The basic principle is the more carbon in the fuel the higher the tax. Therefore, such fuels as fossil fuel, ethanol blends would be taxed lower than fossil fuels alone.

Of course don't listen to me about it. Go back into the archives for that bastion of socialist thought, The Economist magazine. They are a big supporter of the carbon tax concept and have written extensively and convincingly on it.

The Kyoto Protocol - which PMS wants us to pull out of - referring to the international version of emissions trading says that, "Each ratifying... country has agreed to limit emissions to the levels described in the protocol, but many countries have limits that are set above their current production.

"These 'extra amounts' can be purchased by other countries on the open market. So, for instance, Russia currently easily meets its targets, and can sell off its credits for millions of dollars to countries that don't yet meet their targets, to Canada for instance.

"This rewards countries that meet their targets, and provides financial incentives to others to do so as soon as possible:

"Countries also receive credits through various shared 'clean energy' programs and "carbon dioxide sinks" in the form of forests and other systems that remove carbon dioxide from the atmosphere."

Quoting again from the received wisdom of Wikipedia: "Emissions trading" is attractive to public interest environmental organizations, because in an open market they can purchase and retire emissions licenses. This permanently reduces the total amount of pollution produced.... It also encourages manufacturers to decrease pollution so they can sell their credits to other larger polluters and profit. The intention is to create a monetary incentive for companies to reduce pollution. By making it more costly to pollute, it effectively causes companies to compete at being less pollutive while being cost effective."

Please, please, please bring in carbon taxes and 18 cent/litre fuel taxes . . . it will prove to the world we are good international citizens and are willing to pay the price of a devasted economy, a lowered standard of living, closed hospitals, collapsed equalization programs and rampant Western alienation because it is the Liberal Party way of showing leadership.

A carbon tax and emissions trading are two very different things. For a start, a tax is nothing more than a government revenue generator (though it can be made neutral) and has none of the advantages of a market in efficient use of information and price discovery.

Ignatieff will be an unrepentant lefty at least until he sees his first Canadian tax return.

manitoba liberal "The carbon tax is an idea worth exploring....and it's not as if the Liberal party can do any worse in Alberta. "

Did you read Paul's comment? All of it? Including the last line?

Oh, yes, the Liberals COULD do far worse in Alberta. Quebec separatism will be a dream compared to a pi$$ed-off Alberta, particularly a debt-free one. Have you no concept of just how close to the surface AB separatism still is? And how viable the concept is?

It all depends on how you implement a carbon tax. I could see this working under this scenario: apply carbon tax but also lower corporate taxes by the same amount.

There would be no financial pain caused to industry. But by allowing each company to find their own emission reductions (not government regulated), companies could reduce their carbon tax burden thus improving their bottom line while the country realizes an actual reduction in carbon emissions.

This is what environmental economists call the 'polluter pays principle' and has been endorsed repeatedly by the OECD. This economic instrument would create the double dividend that should be sought in sound environmental policy.

Candace... "Oh, yes, the Liberals COULD do far worse in Alberta. Quebec separatism will be a dream compared to a pi$$ed-off Alberta, particularly a debt-free one. Have you no concept of just how close to the surface AB separatism still is? And how viable the concept is?"

Correct me if I'm wrong... hasn't the federal government invested/committed BILLIONS of dollars into the oil sands project??

Alberta should be happy with the money as it rolls in... it won't last forever.

Alberta Separation is a joke. There are some selfish people who think that will magically solve Alberta's problems. Moreover, they are a miniscule minority. I wouldn't worry about it. WRT to the carbon tax, it is all a question of what the overall strategy is and it's implementation. I see no problem in rewarding those who meet targets and punishing those who fail to do so. Then it's just a question of choosing appropriate targets.

I would have no problem stoking the stupid fire of Alberta sepearation zealots. It would hurt the Conservative party a lot because somekind of Bloc Alberta would no doubt fourm and allow vote splits across the province, and in the end it would be have as much chance of working as Quebec 30 year dream of seperating.

What most people don't realize is that the whole policy is to institute the environmental tax (either higher gas taxes or a carbon tax) at the same time that the gov't makes major cuts in other taxes (preferably personal income taxes). The result ould be:

1) The 'average' Canadian would pay no more or less tax than they had prior to the tax shift.2) Canadians who use less energy(/gasoline/etc.depending on the precise tax) would see a net tax cut.3) Canadians who use more energy than average would see a net tax hike.4) Canadians would have economic incentives to reduce their consumption of energy.

THis is great policy, but I don't see the liklihood of it happenning anytime soon.

And besides, until or unless the US comes onside to Kyoto, Kyoto is a waste of time anyhow.

Google carbon credits or "cap and trade" and you'll see that Scott Brison and Stephane Dion have the better solutions. In fact, Brison has a number of plans that can be implemented which will not be as inflationary as the tax alone.

If some sort of environmental tax is to be levied, what will it be based on? Will it be based on total emissions? Or emissions-per-(whatever is produced)? Because the oilsands companies have reduced emissions by (on average) 1/3 per barrel of oil produced, but they are producing MORE (because we keep upping our consumption).

Is it time to dust off the old "let those eastern *s freeze in the dark" bumper stickers and cut production?

Just askin'

Oh, and what sort of tax would go on the (eastern-based) car manufacturers? Would that tax be based on the manufacturing plant or the cars?